New York Paid Family Leave deductions

Sooner or later an employee points at a small line on their pay stub and asks what it is. In New York, that line is usually Paid Family Leave. Paid Family Leave deductions fund the benefit employees can use to bond with a new child, care for a family member with a serious health condition or help when a family member is deployed abroad on active military service.

Getting the deduction right is simple once it’s set up, and getting it wrong is the kind of small error employees notice. Here’s how the deduction works, what changes for 2027, and what you’re responsible for as the employer.

Paid Family Leave deductions for 2026 and 2027

The New York State Department of Financial Services sets the employee contribution rate each year to match the cost of coverage. The rate is a percentage of gross wages each pay period, with a maximum for the year.

Employees who earn less than the New York State Average Weekly Wage, which is $1,922.25 for 2027, contribute less than the annual maximum, in line with what they actually earn. For example, an employee earning $1,000 a week contributes about $4.52 a week in 2027. Commissions and bonuses count as wages, so the deduction applies to them too, until the employee reaches the cap.

What’s at stake: using last year’s rate on the first payroll of January means every check is off. How it gets easier: the new rate goes in once, before the first 2027 pay run, and the cap is tracked automatically.

If you run payroll with PayNortheast, the new rate and annual maximum are applied for you, so the deduction is right from the first paycheck of the year.

It’s an employee-paid deduction

Paid Family Leave is funded by employees through payroll deductions. Employers can choose to pay for it on behalf of employees, but they don’t have to. Coverage is required for most private employers with one or more employees, and it usually comes as a rider on your disability benefits policy from your carrier.

That disability policy has its own small employee deduction. New York lets employers collect half of one percent of wages for disability benefits, up to 60 cents a week, so many pay stubs show two separate lines.

What employees see on the pay stub

The Paid Family Leave deduction appears as its own line, often labeled something like NY PFL or Paid Family Leave, with a current amount and a year-to-date total. Once the year-to-date amount reaches the annual maximum, the deduction stops for the rest of the year.

It’s taken from after-tax wages. Under New York State Department of Taxation and Finance guidance, the contribution doesn’t reduce the wages that federal or state income tax is figured on. That’s why it sits with the other after-tax deductions, not with pre-tax items like retirement contributions.

At year-end, the state says to report each employee’s contributions on Form W-2 in the box for state disability insurance taxes withheld. On the 2026 Form W-2, the IRS split the old box 14 into box 14a (Other) and box 14b (Treasury Tipped Occupation Codes). The IRS lists state disability insurance taxes withheld as an example of a labeled item for box 14a, so that’s where the Paid Family Leave total belongs on 2026 forms.

Your responsibilities as an employer

• Keep coverage in place through your disability and Paid Family Leave carrier, or through approved self-insurance.
• Post the Notice of Compliance your carrier gives you, in plain view.
• Tell employees in writing about Paid Family Leave, for example in your handbook, including how to request leave. The state strongly recommends notifying employees before you start withholding, and offers a template notice.
• Collect the contributions and use them to pay for the coverage.
• Offer waivers to employees who won’t meet the eligibility rules: those regularly scheduled under 20 hours a week who won’t work 175 days in a year, and those scheduled 20 or more hours a week who won’t be employed for 26 consecutive weeks. Keep signed waivers on file.
• Complete your part of the request form when an employee applies for leave.

A waiver is revoked automatically if the employee’s schedule changes so that they’ll meet the eligibility rules, and an employee can revoke it at any time. When that happens you can start deductions again and may collect them retroactively to the date the waiver was signed.

Before your first payroll of 2027

• Update the deduction to 0.452% with the $451.81 annual maximum.
• Confirm that bonus and commission checks include the deduction.
• Review which employees have waivers on file and whether their schedules still qualify.
• Make sure your Notice of Compliance is current and posted.

If you have questions about your own situation, talk with your tax advisor or the Paid Family Leave helpline.

Paid Family Leave deductions FAQ

Are New York Paid Family Leave deductions pre-tax? No. New York Tax Department guidance says they come out of after-tax wages.

When does the deduction stop? When the employee’s year-to-date contributions reach the annual maximum: $411.91 for 2026 and $451.81 for 2027.

Do bonuses and commissions count? Yes. They’re wages, so the deduction applies until the cap is reached.

Who provides the coverage? Your disability and Paid Family Leave insurance carrier, or approved self-insurance. Payroll only takes and reports the deduction.

Sources: New York Paid Family Leave, Updates for 2027; New York Paid Family Leave, Updates for 2026; IRS, General Instructions for Forms W-2 and W-3 (2026); New York Paid Family Leave, Cost and Deductions; New York Paid Family Leave, Employer Responsibilities and Resources; NYS Department of Financial Services, 2027 Paid Family Leave rate decision; NYS Workers’ Compensation Board, Disability and Paid Family Leave for employers